Business Ethics: Issues and Cases

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Description of NAB traders’ case

The case involves two employees who were entrusted with trading in the National Australian Bank (NAB). Instead of two men; David Bullen and Vince Ficarra conducting their responsibilities as expected, they used the opportunity to enrich themselves by defrauding the bank a massive amount of money. Bullen was found guilty of fabricating false profit on the bank’s foreign currency and indicted for two and half years. On the other hand, Ficarra; a junior trader in the bank, was also found guilty and sentenced to serve a fifteen months jail term. He claimed to have been directed by Bullen who was his boss (Ewart 2006). Their act was not only found to be against the established code of ethics but it also ruined the reputation of the bank and caused instability within the bank. The incident led to wrangles between the board of directors and the ex-executive director. There were doubts on how the bank was being managed internally.

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Ethical issue in the case

Every business institution establishes a code of ethics that all employees ought to abide by. These ethics are aimed at ensuring that there is equality at workplaces as well as people relate well and work as expected. In the aforementioned case, the two traders went against the ethic of being honest in executing their responsibilities. The bank had entrusted them with foreign currency trading as its management had trust in them. In return, they were expected to act with the highest degree of integrity in all their transactions. Rather, the two became selfish and opted to enrich themselves at the expense of the bank. This is the reason why they came up with false figures about the banks profit as a way of hiding their sinister motives. Instead of Bullen and Ficarra adopting the established core values of the bank, they opted to be immoral by coming up with schemes to defraud the bank.

The two traders were not only dishonest but they were also corrupt. Their main motive of making alterations on profit performance was aimed at helping them get more bonuses when it came to their rewarding. They believed that the institution would acknowledge their contribution. As the bank had a rewarding system where employees were rewarded based on their contribution, Bullen and Ficarra decided to shortchange the bank by reflecting false figures about the bank’s profit thus giving them an opportunity to earn more.

Description of the Vioxx case

The case concerns a pharmaceutical company that was accused of selling and distributing drugs which contributed to heart attack among the patients that used the drugs. Warren Back was instructed through telephone to collect a couple of envelopes and hand them out to his different international associates who had assembled in one of the hotels in Philadelphia for a meeting. He was also instructed to retain one of the envelopes for himself. It is after opening his envelop that Warren found some instructions requesting him to go back to his hotel room and wait for a phone call (Rout 2009). He was astonished by what he heard from the phone call. The Merck & Co regulatory affairs manager from Australia told him that their drug Vioxx was subjected to a recall as it was identified to cause heart attack.

What was more shocking was the manner in which the company responded to the news. It was determined to make profit from the drug and hence was not willing to recall its drug from the market. Some of the complainants claimed that the company was aware of the adverse effects of the drug but they decided to cover up due to their aim of making profit. The company defended itself by claiming that there were no scientific proofs that showed that the drug contributed to heart attack suffered by those who used it. From the case, a lot of negative activities that goes on behind the scene in the pharmaceutical industry have been revealed. It has been found that the companies use different mechanisms to ensure that doctors recommend their drugs. Merck & Co has been found to bribe doctors and other scientists so as to claim that the drug has no side effects.

Ethical issues

Pharmaceutical industry is a vital industry in every country. It is through the industry that patients are able to get the right drugs to cure their diseases. For safety purpose, there are numerous regulations that have put in place to ensure that the industry does not manufacture drugs that may have side effects on the users. On its side Merck went against its social corporate responsibilities by manufacturing Vioxx and selling it to the public even before it was tested to ensure that it was safe for use. By bribing doctors and scientists to approve the drug, the company, the scientists and the doctors acted against the integrity that they are expected to uphold in their responsibilities. Doctors are well versed with the effects of using wrong drugs. Before they are allowed to work as doctors they usually take an oath that requires them to exercise high level of professionalism in their duties. They are supposed to ensure that their activities do not in any way adversely affect the patients. By doctors and scientists accepting bribes to recommend Merck & Co’s drugs they were all found to mind about their interests at the expense of patients who were desperately in need of drugs.

The case has also revealed how corrupt the pharmaceutical industry has become. Everyone in the industry is concerned about making money and does not care about the means through which he or she will get the money. This is the reason why Merck & Co is determined to buyout its right to continue selling the drug as it gives the company high returns. The company also withheld some information about the drug so as to ensure that people did not learn about its side effects.

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Description of the Murray-Darling case

The case is about the call by Professor Mike Young for disconnection of Murray-darling River. The main reasons he presents to support his call is the need for the waterway to be reconfigured as well as the increasing rate of its shrinkage. According to Young, Australians will have to make informed decision on some of the environmental assets to do away with and those to retain. This is due to the dry spell that has rocked the country. The professor highlights some of the environmental assets that he believes are not very significant and the country can do without. His sentiments have been supported by different people including government agents but they feel that there is need for them to make calculated moves before they decided on the measures to take (Ker 2009). On the other hand, the Victorian government has been reluctant to buying into the given suggestions. Spokesperson for the government claims that instead of abandoning some of the environmental assets, the government is coming up with measures to ensure that water is utilized strategically.

Ethical issues

There are numerous ethical issues that have arisen from the Murray-Darling River case. One of the issues is human dignity. No one can live without water. As a result, as much as the Australian government wish to conserve water and environment, it has to ensure that the strategies used do not deny some of the citizens an opportunity to access clean and regular supply is this vital commodity. The government needs to ensure that all Australians are treated equally when it comes to water supply and environmental conservation.

In addition, the issue of bioethics arises. Some of the suggestions made by the stakeholders are likely to adversely affect some sections of the ecosystem. For instance, diverting the river’s course away from Barmah State Forest would mean that the forest would be negatively affected. Hence, the government ought to make calculated moves to ensure that it conserves the environment and at the same time supply people with clean water.

Description of the ABC learning case

With time, it has dawned on ABC learning that its previous and present earnings have been doctored and inflated. This is after an audit that was conducted by Ernst & Young Company. However, ABC is adamant that the transactions that led to income being inflated were not connected to party transactions. Rather, they belong to parties who are well versed with the company. These transactions came about after ABC resolved to build numerous child-care centers. A number of companies benefited from the scheme as well as the ABC. In this dispute, ABC has been accused of failing to pay tax. The company denies playing any role in management of child-care centers (Kruger 2008). Rather, it claims that there are numerous companies that are responsible of this and are not related to ABC in any way.

Despite ABC claiming that the different child-care centers that work with it ought to be treated as independent entities, some have since then transferred their management to ABC leading to the company assuming the entire tax burden that they owed the government. A good example is Harrington Park Children Services that was once managed by Mr. Martin.

Ethical issues

One of the corporate social responsibilities of any organization is to ensure that it has paid all the taxes. In this case, ABC can be seen as to come up with schemes to help it avoid paying tax. Despite the company claiming not to take part in management of child-care centers, it admits that it has more than 16,000 employees working in different child-care centers found in Australia. This fact subjects the company to remitting payroll tax of which it does not. Transactions within the company are not conducted with the required level of integrity. Numerous transactions that occur within the company are not made public. This is the reason why the company’s revenues are found to be inflated.

Description of the James Hardie case

James Hardie was found to be guilty of avoiding paying the Australian Taxation Office $380 million as tax. It was noted that the company’s subsidiary failed to remit the tax during the 1998 restructure. This is after James Hardie transferred its headquarters to United States establishing a subsidiary company in Dutch (Whitbourn 2010). The current financial status of the company has led to people being skeptical about the company’s ability to compensate the victims who suffered when mining asbestos.

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Ethical issues in the case

Every organization is bound by the Australian law to paying tax. The law prohibits any move by an organization to come up with schemes to help it avoid paying tax. The move by James Hardie to restructure its companies across the globe was found to be aimed at helping the company avoid paying tax. This is against section IVA of the Australian tax law.

Another ethical issue that has emerged from the case is the ability of the company to compensate those who suffered during asbestos mining with the company. It is the responsibility of every company to compensate employees who suffer any injury or damage while working for the company. To be able to compensate the victims, the company had requested the government to relieve it from some of the taxation programs. Subjecting the company into such huge amount of tax creates doubts that the company may delay compensating the victims.

Benefits of good ethical practice to businesses

Good ethical practice has immense benefits to businesses. To begin, ethical practices within a business lead to employee and customer satisfaction. As every stakeholder within a business act ethically, all processes within the business are run smoothly leading to employee satisfaction. Consequently, employees are committed to ensuring that they have helped the business achieve its goals (Damien & Cohen1998). In the process, they ensure that they not only efficiently conduct their duties but they also offer quality products and services. This helps in customer satisfaction hence helping the business increase its profit margin. Despite ethical practices having significant benefits to a business, they ought to be implemented cautiously as they may at times lead to internal wrangles within a business. For instance, if employees realize that they are significantly contributing towards the success of the business they may demand for compensation of salary increment. If this is not well addressed, it may result to employee morale going down or even to high employee turnover.

Good ethical practices within a business helps the business cut down on operation costs. These are costs such as those associated with employee turnover. As employees learn that everybody in the organization is committed to ensuring that all operations run smoothly, their morale is boosted and they feel to be part and parcel of the business. This reduces the chances of such employees wishing to walk away from the business. In the long run, the business is able to invest its gained resources in other projects hence helping it achieve its long-term objectives. Nevertheless, the business also incur some expenses in its effort to ensure that it act ethically in all its operations (Damien & Cohen 1998). For instance, to ensure that it offers quality products or services, it has to heavily invest in production and distribution of such products or services. However, the benefits reaped from this surpasses the cost incurred thus underscoring the need for businesses to act ethically.

Ethical practices within a business help in improving the image of the business. Basically, customers would like to be associated with a business that is conscious of their needs. By a business acting ethically, customers feel to be valued thus becoming loyal to the business. The business becomes popular thus increasing its sales volume and profitability.

Encouraging businesses to act ethically

There are different avenues that can be employed in encouraging businesses to act ethically. One of the avenues is through use of trade associations. For international businesses that are members of trade associations, the associations can come up with a guideline of ethical practices that member businesses ought to adhere to. The association can go a step further and explain the benefits that might be accrued by businesses that would follow the guidelines. Consequently, business operators would readily accept to embrace the rules hence acting ethically.

Apart from trade associations, governments may also encourage ethical practices within businesses by laying down ethical guidelines to be followed by the businesses (Hardcastle 2006). Exerting pressure on businesses found not to comply with the regulations would help in ensuring that all organizations act ethically. One of the drawbacks of this approach is that at times the government may be reluctant to implement the guidelines thus paving a room for business operators to act unethically. In spite of government regulations facilitating in instilling ethics in businesses, they can not absolutely help in solving ethics problems in the business world.

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Encouraging business organizations to establish their codes of ethics is another way that can help in encouraging businesses to act ethically (Hardcastle 2006). Through this, employees can be aware of how they are supposed to carry themselves when in the business thus acting ethically.

Reference List

Damien, G. & Cohen, S. 1998. Business ethics: problems and cases, 4th edition. South Melbourne: Oxford University Press.

Ewart, H., 2006. Former NAB traders jailed. Australian Broadcasting Corporation. Web.

Hardcastle, J., 2006. Encouraging ethical behavior.

Ker, P., 2009. We can’t keep it all, says Murray-Darling expert. The Australian.

Kruger, C., 2008. How the numbers stacked up in ABC’s labyrinthine structure. The Sydney Morning Herald.

Rout, M., 2009. Case shines light on Merck. The Australian.

Whitbourn, M., 2010. James Hardie loses tax case. Australian Financial Review.

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